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The US is ready to block China’s access to advanced chip design software

Daniel Nenni

Admin
Staff member
The Biden administration plans to block the export of a certain type of chip design software needed to implement a powerful new manufacturing technique, in a bid to hamper China’s AI effort.


The U.S. is poised to implement new export restrictions on a specific type of software used to design semiconductors utilizing a next-generation technology that is vital for producing the most advanced AI chips, Protocol has learned, in an effort to target Chinese chipmakers.

The Biden administration has been weighing a potential ban for months, but has elected to order the Commerce Department to issue a new rule that will effectively block the export of chip design software that’s required to make chips with an emerging technology called gate all around, according to a person familiar with the administration’s plans.

The new export restriction is set to be implemented in the coming weeks and is currently under review by the Office of Management and Budget, though the details of its implementation are still being hammered out. The administration’s goal is to block the sale of the design tools to Chinese companies pursuing AI applications, the person said.

The White House and the Commerce Department did not return multiple requests for comment.

William Reinsch, senior adviser and Scholl Chair in International Business at the Center for Strategic and International Studies, likened the U.S. approach to curtailing China’s access to key technologies to a marathon: To win, the U.S. has to either run faster or trip China.

“What [China] is talking about is really kind of a direct challenge to American technology supremacy,” Reinsch said. “And I think Biden's figured out the best way to meet that kind of challenge is to run faster. So that's the more important part of the equation, but tripping them along the way is OK in international politics and economics.”

The software that will be affected by the new restrictions is an advanced form of a widely used technology called electronic design automation, or EDA, software, and it’s built by companies such as Cadence, Synopsys and Siemens. The software is a crucial design tool for engineers working on products that will eventually be sent to a chip manufacturer such as Intel, TSMC or Samsung. It also helps engineers ensure there aren’t any issues with the design before it’s made into chips.

Cadence and Siemens did not return requests for comment. A Synopsys spokesperson said that the company complies with all U.S. export controls.

Chip design software companies count China as a significant customer. Cadence derived 13% of its revenue from Chinese sources in its fiscal second quarter, according to a recent quarterly filing with the SEC. Synopsys disclosed that, also during its fiscal second quarter, 17% of its revenue came from China. However, it isn’t clear from those SEC filings how much of Cadence’s or Synopsys’ revenues comes from software that’s used for chips with gate-all-around technology, which is very new.

The administration’s plan to block specific EDA software used for those advanced designs expands existing controls on chip-related exports to China. The U.S. already restricts a range of technologies necessary to make chips with a different advanced technique called extreme ultraviolet lithography in a bid to prevent China from manufacturing the most advanced designs, although it’s not clear how effective such measures have been. Other existing restrictions include chip design software that is used for some aspects of manufacturing with EUV, but the new plan specifically targets the tools to build chips with gate-all-around tech.

Last week, equipment makers KLA and Lam Research disclosed that the Commerce Department had notified them that the U.S. was expanding its ban on selling tools to China that are capable of 14-nanometer manufacturing, a years-old process. Executives at the tool makers said that the restrictions targeted facilities that make logic chips.

The Commerce Department previously told Protocol that its Bureau of Industry and Security is updating its approach to China, and looking for ways to “maximize the effectiveness of our export controls. This includes ongoing and future work to tighten existing policies relating to the PRC’s production of advanced semiconductors, utilize a variety of legal, regulatory and, when appropriate, enforcement tools in BIS’s toolbox, and grow and strengthen our cooperation with allies and partners.”

The next-generation gate-all-around technology is critical for chipmakers who are in a constant battle with rivals to increase computing horsepower, while at the same time making chips that consume less energy. Gate all around is set to deliver substantial gains on both fronts and at the same time presents an opportunity for manufacturers such as TSMC or Intel to gain an advantage.
 
A few of the leading lights got arrested last week the Govt in China , likely the CCP more than capable stopping any progress themselves

I spent quite a few years in china, mostly with fabless companies. It was a stark contrast with US start-up companies.

 
I spent quite a few years in china, mostly with fabless companies. It was a stark contrast with US start-up companies.


When everything has to have a political end not sure thats a system that is going to benefit most people
 
Funny how America's EDA cartel comes in handy on a geopolitical scale.. probably the most underrated lever in the "chip war". Even if the gov't spends CHIPS money efficiently to onshore manufacturing, they won't impact the semiconductor landscape for years. I've used several Chinese variants and they aren't great, but I can easily see this creating the conditions for them to figure it out.
 
Funny how America's EDA cartel comes in handy on a geopolitical scale.. probably the most underrated lever in the "chip war". Even if the gov't spends CHIPS money efficiently to onshore manufacturing, they won't impact the semiconductor landscape for years. I've used several Chinese variants and they aren't great, but I can easily see this creating the conditions for them to figure it out.
We've had a discussion here ( I started a thread on this here https://semiwiki.com/forum/index.ph...onopolies-or-cartels-in-eda.15687/#post-51420 ) about whether this really is a "cartel". I found the term "oligopoly" closer to reality here.

There are massive barriers to entry in a sector like EDA, in some ways similar to the aircraft engine business. The software is extremely complex and rapidly changing and just to add to the challenge spread over quite a small user base. EDA vendors have to spend a lot of effort making their tools work with the latest process technology changes to ensure they are still functionally correct and accurate. That's in addition to trying to clear a huge backlog of bugs and limitations. What that means in practice is that you need a small army of product and application engineers from the vendor, plus skilled and experienced users to reliably get the very best results. Success is certainly well below 100% user skill and well above 0% EDA vendor support.

So whilst China might be able to create new products which work on a small set of projects, producing tools and complete design flows which work for all customers and technologies is a race they can only win if there is some quite catastrophic market or execution scenario by the incumbents. Not that likely in my view.

In my view, EDA is as much a service business as a product one. Even when you think you're only buying EDA tools and not design services, you're still buying essential support with the tools. So we'd need to see if China can run such a global services business. In pretty much every global services business (finance, law, accountancy, ...) the West has a commanding lead. I'm not saying these are all businesses and companies I necessarily admire and respect (international banks, big 4 accountants, ...), just that the West has the lead. There's likely some cultural aspect to that - occurs too frequently to be purely coincidence or history ?

This is just the way it is - quite regardless of what the US or Chinese governments want it to be. Taking Chinese companies off EDA support after selling them the products might be nearly as effective ... . (I'm not suggesting that as a policy, just saying).
 
We've had a discussion here ( I started a thread on this here https://semiwiki.com/forum/index.ph...onopolies-or-cartels-in-eda.15687/#post-51420 ) about whether this really is a "cartel". I found the term "oligopoly" closer to reality here.

There are massive barriers to entry in a sector like EDA, in some ways similar to the aircraft engine business.

They didn't get to where they are today purely rely on their own research,there were series merger and acquisition alone the development of the company.
 
When everything has to have a political end not sure thats a system that is going to benefit most people

Isn't that exactly what‘s happening in the US?The whole PC thing is get more prevalent everyday,having people with the right "tag"(transgender, single mother,minority etc) in the company is more important than having people with the right skill set.
 
They didn't get to where they are today purely rely on their own research,there were series merger and acquisition alone the development of the company.
But is there anything actually wrong with that ? We can argue that Synopsys has been built more by internal organic growth and technology and Cadence more through acquisition. Provided the acquisitions meet anti-trust (takeover) legislation (by definition it did) and the sort of technology you produce by bolting together acquired products actually works (not always a given, or may take a long time to fix), does it matter ?

Whether the current anti-trust rules are up to the job is another matter and worthy of discussion. At one time a Cadence-Mentor merger was under consideration. I never saw any monopoly concerns raised about it at the time - which I found astonishing.
 
The real issue here is probably not the design of GAA chips per say but the access to GAA technology. China has a bad habit of copying instead of innovating and that is why they are so behind today. Maybe if companies are more diligent of protecting their IP other companies will spend their R&D money engineering instead of reverse engineering.
 
Funny how America's EDA cartel comes in handy on a geopolitical scale.. probably the most underrated lever in the "chip war". Even if the gov't spends CHIPS money efficiently to onshore manufacturing, they won't impact the semiconductor landscape for years. I've used several Chinese variants and they aren't great, but I can easily see this creating the conditions for them to figure it out.

Why? A "Chinese EDA" is a 15-10 years old pirated Cadence passed on USB sticks as a standard.
 
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